Colorado § 8-41-401 - Lessor contractor-out deemed employer - liability - recovery.

§ 8-41-401. Lessor contractor-out deemed employer - liability - recovery.

(1) (a) (I) Any person, company, or corporation operating or engaged in or conducting any business by leasing or contracting out any part or all of the work thereof to any lessee, sublessee, contractor, or subcontractor, irrespective of the number of employees engaged in such work, shall be construed to be an employer as defined in articles 40 to 47 of this title and shall be liable as provided in said articles to pay compensation for injury or death resulting therefrom to said lessees, sublessees, contractors, and subcontractors and their employees or employees' dependents, except as otherwise provided in subsection (3) of this section.

(II) Notwithstanding subparagraph (I) of this paragraph (a) and any other provision of law to the contrary, it is presumed that a buyer of goods is not liable as a statutory employer when a lessee, sublessee, contractor, or subcontractor, or their employee who is delivering the goods to the buyer injures himself or herself while not on the buyer's premises. The presumption may be overcome by a showing that the lessee, sublessee, contractor, or subcontractor, or their employee was performing a job function that would normally be performed by an employee of the buyer of the goods being delivered. Nothing in this subparagraph (II) creates a presumption of a statutory employer-employee relationship when an injury occurs on the buyer's premises.

(III) For the purposes of this section, a "statutory employer" is an employer who is responsible to pay workers' compensation benefits pursuant to subparagraph (I) of this paragraph (a).

(a.5) The general assembly hereby finds and determines that the decision of the Colorado court of appeals in the case of Newsom v. Frank M. Hall & Co., No. 02CA1375 (February 26, 2004), in which the court held that an independent contractor may be an entity other than a natural person, did not accurately reflect the intent of the general assembly when it passed Senate Bill 93-132 and Senate Bill 95-072. The general assembly hereby declares that the term "individual", as used in this section and in section 8-40-202, means a natural person.

(b) The employer, before commencing said work, shall insure and keep insured against all liability as provided in said articles, and such lessee, sublessee, contractor, or subcontractor, as well as any employee thereof, shall be deemed employees as defined in said articles. The employer shall be entitled to recover the cost of such insurance from said lessee, sublessee, contractor, or subcontractor and may withhold and deduct the same from the contract price or any royalties or other money due, owing, or to become due said lessee, sublessee, contractor, or subcontractor.

(2) If said lessee, sublessee, contractor, or subcontractor is also an employer in the doing of such work and, before commencing such work, insures and keeps insured its liability for compensation as provided in articles 40 to 47 of this title, neither said lessee, sublessee, contractor, or subcontractor, its employees, or its insurer shall have any right of contribution or action of any kind, including actions under section 8-41-203, against the person, company, or corporation operating or engaged in or conducting any business by leasing or contracting out any part or all of the work thereof, or against its employees, servants, or agents.

(3) Notwithstanding any provision of this section or section 8-41-402 to the contrary, any individual who is excluded from the definition of employee pursuant to section 8-40-202 (2), or a working general partner or sole proprietor who is not covered under a policy of workers' compensation insurance, or a corporate officer or member of a limited liability company who executes and files an election to reject coverage under section 8-41-202 (1) shall not have any cause of action of any kind under articles 40 to 47 of this title. Nothing in this section shall be construed to restrict the right of any such individual to elect to proceed against a third party in accordance with the provisions of section 8-41-203. The total amount of damages recoverable pursuant to any cause of action resulting from a work-related injury brought by such individual that would otherwise have been compensable under articles 40 to 47 of this title shall not exceed fifteen thousand dollars, except in any cause of action brought against another not in the same employ.

(4) (a) Notwithstanding any provision of this section to the contrary, any person, company, or corporation who contracts with a landowner or lessee of a farm or ranch to perform a specified farming or ranching operation shall, prior to entering into such contract, provide for and maintain, for the period of such contract, workers' compensation coverage pursuant to articles 40 to 47 of this title covering all the employees and laborers to be utilized under such contract. Proof of such coverage on forms or certificates issued by the insurer shall be provided to the person, company, or corporation contracting for the labor prior to performing such contract.

(b) Any person, company, or corporation contracting with a landowner or lessee of a farm or ranch to provide a specified farming or ranching operation who fails to provide coverage pursuant to subsection (1) of this section or who fails to maintain such coverage for the term of the contract commits a class 2 misdemeanor.

(c) Notwithstanding any provision of this section to the contrary, no person, company, or corporation contracting with a landowner or lessee of a farm or ranch operation to perform a specified farming or ranching operation nor any employee of such person, company, or corporation required to be covered by workers' compensation pursuant to this subsection (4) shall have any right of contribution from, or any action of any kind, including actions under section 8-41-203, against, the person, company, or corporation contracting to have such agricultural labor performed.

(d) (I) If any person, company, or corporation contracting to provide labor to perform specified farming or ranching operations and required to provide workers' compensation coverage pursuant to articles 40 to 47 of this title fails to provide such coverage and the person, company, or corporation for whom the labor is provided incurs any liability thereby, the person, company, or corporation providing the labor shall be subject to a cause of action for said liability and for reasonable attorney fees.

(II) If the person, company, or corporation for whom the labor for the performance of a specified farming or ranching operation is provided is sued by the injured employee, said person, company, or corporation may join the person, company, or corporation providing the labor as a third-party defendant in lieu of filing an independent action.

(5) The provisions of this section shall not apply to licensed real estate brokers and licensed real estate sales agents, as regulated in article 10 of title 12, who are excluded from the definition of employee pursuant to section 8-40-301 (2).

(6) Notwithstanding any provision of this section to the contrary, any person, company, or corporation operating a commercial vehicle as defined in section 42-4-235 (1)(a), C.R.S., who holds oneself or itself out as an independent contractor only to perform for-hire transportation, including loading and unloading, and who contracts to perform a specific transportation job, transportation task, or transportation delivery for another person, company, or corporation is not entering into an employee and employer relationship for purposes of workers' compensation coverage pursuant to articles 40 to 47 of this title. Nothing in this subsection (6) shall be construed to prohibit a determination that an individual is excluded from the definition of employee pursuant to section 8-40-202 (2) if such individual is operating a commercial vehicle as defined in section 42-4-235 (1)(a), C.R.S.

(7) This section shall not apply to any person excluded from the definition of "employee" pursuant to section 8-40-301 (5) or (7).

Source: L. 90: Entire article R&RE, p. 481, § 1, effective July 1. L. 92: (7) added, p. 1798, § 2, effective June 6. L. 93: (3) amended, p. 357, § 3, effective April 12; (6) amended, p. 1861, § 1, effective June 6. L. 94: (6) amended, p. 2544, § 16, effective January 1, 1995. L. 95: (1) and (3) amended, p. 344, § 3, effective July 1. L. 96: (1) and (3) amended, p. 647, § 2, effective May 1. L. 2000: (7) amended, p. 1497, § 2, effective August 2. L. 2004: (1)(a) amended and (1)(a.5) added, p. 1078, § 1, effective May 21. L. 2013: (1)(a) amended, (SB 13-147), ch. 389, p. 2262, § 1, effective June 5. L. 2019: (5) amended, (HB 19-1172), ch. 136, p. 1647, § 21, effective October 1. L. 2021: (4)(b) amended, (SB 21-271), ch. 462, p. 3142, § 94, effective March 1, 2022.

Editor's note: This section is similar to former § 8-48-101 as it existed prior to 1990.

ANNOTATION

I. General Consideration.

II. Liability of Lessor or Employer.

I. GENERAL CONSIDERATION.

Law reviews. For note, "Uranium Mining Lease", see 27 Rocky Mt. L. Rev. 425 (1955). For article, "One Year Review of Corporations, Partnership and Agency", see 37 Dicta 11 (1960). For article, "Independent Contractors and the Colorado Workers' Compensation Act — Parts I and II", see 22 Colo. Law. 545 and 1281 (1993). For article, "Update on Colorado Appellate Decisions in Workers' Compensation Law", see 33 Colo. Law. 117 (Nov. 2004). For article, "'Statutory Employment'—What Kind of Work Is That?", see 45 Colo. Law. 53 (June 2016).

Annotator's note. (1) Since § 8-41-401 is similar to § 8-48-101 as it existed prior to the 1990 repeal and reenactment of the "Workers' Compensation Act of Colorado", articles 40 to 47 of this title, relevant cases construing that provision have been included in the annotations to this section.

(2) Cases included in the annotations to this section which refer to the industrial commission were decided prior to the enactment of 1986 Senate Bill No. 12 which abolished said commission and transferred some of its powers, duties, and functions under the act to the industrial claim appeals office.

This section is constitutional. Indus. Comm'n v. Hammond, 77 Colo. 414, 236 P. 1006 (1925); Md. Cas. Co. v. Indus. Comm'n, 86 Colo. 553, 283 P. 548 (1929).

This section does not deprive one of due process and equal protection. Ellerman v. Amax, Inc., 194 Colo. 392, 572 P.2d 836 (1977).

Furthermore, this section is not class legislation and not unconstitutional on that ground. Neither is this section unconstitutional because inconsistent with § 8-41-105; they may be construed together. Flick v. Indus. Comm'n, 78 Colo. 117, 239 P. 1022 (1925).

Subsection (3), limiting damages available to one who waives workers' compensation insurance, is constitutional. The amount of the cap on damages was arrived at through legislative compromise in an effort to address the competing concerns of providing support for sole proprietors while encouraging participation in the workers' compensation system and protecting the interests of builders and general contractors. It is not special legislation nor does it deprive claimants of property without due process. Snook v. Joyce Homes, Inc., 215 P.3d 1210 (Colo. App. 2009).

Not modification of § 8-41-105. The contracting-out provision of this section does not modify the exemption for farm and ranch labor of § 8-41-105. Hefley v. Morales, 197 Colo. 523, 595 P.2d 233 (1979).

Section also held to comport with constitutional provisions on due process, equal protection, and special legislation. O'Quinn v. Walt Disney Prods., Inc., 177 Colo. 190, 493 P.2d 344 (1972).

The creation of the classification of statutory employers and employees under this section is not a denial of equal protection. Edwards v. Price, 191 Colo. 46, 550 P.2d 856 (1976); Buzard v. Super Walls, Inc., 681 P.2d 520 (Colo. 1984).

While this section does not bar negligence actions by employees of one subcontractor against another subcontractor, nor negligence actions by employees of the general contractor against a subcontractor, but employees of a subcontractor are barred from bringing an action against the general contractor, this classification does not deny equal protection of the laws, since the classification is not based upon "a suspect classification", nor does it infringe upon "a fundamental right", and it satisfies the "rational basis" test. Edwards v. Price, 191 Colo. 46, 550 P.2d 856 (1976).

The purpose of this section is to prevent the avoidance of the insurance contract by calling the relation one of principal and independent contractor when such relation does not exist. The statute is intended to cover every business conducted by one through the activities of another under any kind of a contract. Indus. Comm'n v. Bracken, 83 Colo. 72, 262 P. 521 (1927); Rogers v. Solem, 103 Colo. 52, 83 P.2d 154 (1938); Zimmerman v. Indus. Comm'n, 109 Colo. 533, 127 P.2d 878 (1942); Faith Realty & Dev. Co. v. Indus. Comm'n, 170 Colo. 215, 460 P.2d 228 (1969); Morales v. Indus. Comm'n, 41 Colo. App. 180, 584 P.2d 1229 (1978), rev'd on other grounds, 197 Colo. 523, 595 P.2d 233 (1979).

The statutory intent behind this statute is to prevent employers from evading compensation coverage by contracting-out work instead of directly hiring the workmen. San Isabel Elec. Ass'n v. Bramer, 182 Colo. 15, 510 P.2d 438 (1973).

To implement the general purpose of the workmen's compensation laws, this section was enacted to prevent an employer from avoiding responsibility under the workmen's compensation act by contracting-out his work to an uninsured subcontractor. Frohlick Crane Serv., Inc. v. Mack, 182 Colo. 34, 510 P.2d 891 (1973); Hefley v. Morales, 197 Colo. 523, 595 P.2d 233 (1979).

State policy. It is the policy in Colorado to make the more financially solvent general contractor ultimately responsible for workmen's compensation benefits arising out of injuries to employees of all subcontractors. Edwards v. Price, 191 Colo. 46, 550 P.2d 856 (1976).

It is the general contractor to whom the employees of all subcontractors may look for workmen's compensation if their immediate employer is uninsured or financially irresponsible. This distinguishes the general contractor from the subcontractor and is the rationale which sustains the different treatment accorded general contractors by statute. Edwards v. Price, 191 Colo. 46, 550 P.2d 856 (1976).

Basis for policy. The public policy upon which the workmen's compensation act is founded derives from the need to provide monetary relief for workmen injured in the course of their employment, regardless of the negligence of the employer or the lack of negligence on the part of the employee. Edwards v. Price, 191 Colo. 46, 550 P.2d 856 (1976).

Burden of proof in workers' compensation case rests on the employer asserting the affirmative defense that the section bars the independent contractor from bringing such a claim. Stampados v. Colo. D & S Enters., 833 P.2d 815 (Colo. App. 1992).

Section bars only claims by independent contractors who have the option of obtaining workers' compensation insurance under the listed statutes and fail to do so, therefore it can apply only to those independent contractors who are corporate officers, working partners, individual employers, or employers in general who do not obtain insurance coverage. Stampados v. Colo. D & S Enters., 833 P.2d 815 (Colo. App. 1992).

Award based upon erroneous interpretation of law sustained if award proper absent misinterpretation. Even though a court may determine that the industrial commission erroneously interpreted the law, if the commission's award would have been correct had the law been properly interpreted, that award will be sustained. Univ. of Colo. Med. Ctr. v. Indus. Comm'n, 622 P.2d 596 (Colo. App. 1980).

A supplier is not a subcontractor within meaning of this section. While statutory employer provisions have been liberally construed by the courts, it is not every relationship that constitutes a contract within the purview of the act. Thus, the term "subcontractor" is not intended to include suppliers of goods and materials. This construction rests not only upon the legal distinction between a "subcontractor" and a "supplier", but also upon recognition that if this section were applied to ordinary sales of merchandise, business dealings would be seriously hampered. Doyle v. Mo. Valley Contractors, Inc., 288 F. Supp. 121 (D. Colo. 1968).

Lessor is liable irrespective of the number of men employed. The liability of the lessor of a business, under the workmen's compensation act, is fixed by this section, irrespective of the number of men employed. Indus. Comm'n v. Hammond, 77 Colo. 414, 236 P. 1006 (1925).

Likewise, a person operating or engaged in a business, who contracts out a part or all of the work to another contractor or subcontractor, is an employer regardless of the number of employees engaged in the work. Snyder v. Indus. Comm'n, 138 Colo. 523, 335 P.2d 543 (1959).

A person need not be engaged in a business in order to be considered an employer under the Workers' Compensation Act. Evans v. Webster, 832 P.2d 951 (Colo. App. 1991).

Without control one is not a statutory employer. An owner who leases equipment to a corporation for use in the corporation's business, and who has no control or interest in such business or in its operation, is not an employer within the meaning of this section. Flake Motors v. Huskins, 128 Colo. 414, 262 P.2d 736 (1953); Indus. Comm'n v. Vancil, 133 Colo. 238, 293 P.2d 641 (1956); White v. Indus. Comm'n, 140 Colo. 11, 342 P.2d 688 (1959).

But where the claimant and the equipment are admittedly under the exclusive control, and subject at all times to the exclusive direction of a company when claimant begins an interstate journey in consummation of the business objectives of the company, he becomes a special employee of that company so far as liability for payment of workmen's compensation is concerned. Am. Red Ball Transit Co. v. Indus. Comm'n, 145 Colo. 509, 359 P.2d 1018 (1961).

Statutory employment relationship is not predicated on a finding of employer control. Rather, the alleged statutory employer's control over the employee is but one method of demonstrating the importance of the contracted services to the alleged employer. Virginians Heritage Square Co. v. Smith, 808 P.2d 366 (Colo. App. 1991); Finlay v. Storage Tech. Corp., 733 P.2d 322 (Colo. App. 1986), aff'd, 764 P.2d 62 (Colo. 1988).

In contrast to the borrowed employee relationship, the statutory employment relationship does not rest upon a finding of employer control. Evans v. Webster, 832 P.2d 951 (Colo. App. 1991).

Test for statutory employer. Company is a statutory employer if it engages in contract work when: (1) The work contracted out is a part of the normal business of the company contracting out such business and (2) the work contracted out is business which the company would ordinarily accomplish with its own employees. Campbell v. Black Mtn. Spruce, Inc., 677 P.2d 379 (Colo. App. 1983).

Court not required to apply regular business test when scope of contracted business is clear and work being done when injury occurred is clearly within that scope. Monell v. Cherokee River, Inc., 2015 COA 21, 347 P.3d 1179.

For purposes of deciding whether company qualifies as "statutory employer" of independent contractor's employees, work that company contracts out may constitute part of its regular business operation, even though it does not contribute directly to particular business in which company is engaged. Finlay v. Storage Tech. Corp., 733 P.2d 322 (Colo. App. 1986), aff'd, 764 P.2d 62 (Colo. 1988); Humphrey v. Whole Foods Mkt. Rocky Mtn., 250 P.3d 706 (Colo. App. 2010).

And fact that work is always performed by independent contractor is not material in deciding whether work is part of contracting party's regular business operation under workers' compensation statute. Finlay v. Storage Tech. Corp., 733 P.2d 322 (Colo. App. 1986), aff'd, 764 P.2d 62 (Colo. 1988).

One can be a statutory employer and liable for benefits under this section even if the work contracted out is casual and not related to the business or profession of the property owner. O'Neill v. Indus. Claim Appeals Office, 778 P.2d 295 (Colo. App. 1989).

Regular business is defined by its total business operation considering elements of routineness, regularity, and importance of contracted service to the employer. Finlay v. Storage Tech. Corp., 764 P.2d 62 (Colo. 1988); Porta-Pacific v. Smithers, 781 P.2d 147 (Colo. App. 1989); Littlefield v. Mobil Expl. & Producing, North Am., Inc., 988 F. Supp. 1403 (D. Utah 1996); Rowan v. Vail Holdings, Inc., 31 F. Supp. 2d 889 (D. Colo. 1998).

Thus, this section by definition extends the concepts of employer and employee far beyond the meanings of these terms at common law. By such extension there have been introduced into the nomenclature of the law on master and servant the terms statutory employer and statutory employee. Snyder v. Indus. Comm'n, 138 Colo. 523, 335 P.2d 543 (1959); Morales v. Indus. Comm'n, 41 Colo. App. 180, 584 P.2d 1229 (1978), rev'd on other grounds, 197 Colo. 523, 595 P.2d 233 (1979).

And to bring this section into application the test is whether the subcontracted work is part of the regular business of the constructive employer as the statute covers all situations in which the subcontracted work is such part of his regular business operation as the statutory employer ordinarily would accomplish with his own employees. Pioneer Constr. Co. v. Davis, 152 Colo. 121, 381 P.2d 22 (1963); Gardner Motor Co. v. Feistel, 160 Colo. 135, 414 P.2d 915 (1966); San Isabel Elec. Ass'n v. Bramer, 31 Colo. App. 134, 500 P.2d 821 (1972); Posey v. Intermountain Rural Elec. Ass'n, 41 Colo. App. 7, 583 P.2d 303 (1978).

Condominium owner was a statutory employer of house cleaner hired by maintenance company where owner, although using condominium unit as a second residence, was also in the regular business of renting it out. Thornbury v. Allen, 39 P.3d 1195 (Colo. App. 2001).

Alleged statutory employer was exempt from operation of this section where its primary business was to lease property for investment purposes. The fact that the lease contained provisions specifically applicable to business of lessee was not sufficient to show that lessor was involved in lessee's business. Virginians Heritage Square Co. v. Smith, 808 P.2d 366 (Colo. App. 1991).

General contractor remains statutory employer of subcontractor's employee and is entitled to a corresponding immunity from suit, despite the fact that the subcontractor is an independent contractor of the general contractor. The exception stated in subsection (1)(a) (now subsection (3)) of this section applies only to individuals working as independent contractors and to individual partners, members, corporate officers, and sole proprietors who have waived coverage under the workers' compensation act. Frank M. Hall & Co. v. Newsom, 125 P.3d 444 (Colo. 2005) (decided prior to the 2004 amendment to subsection (1)(a) and adoption of subsection (1)(a.5)).

Employer's past practices are relevant in determining whether an employer is a statutory or constructive employer. San Isabel Elec. Ass'n v. Bramer, 182 Colo. 15, 510 P.2d 438 (1973); Campbell v. Black Mtn. Spruce, Inc., 677 P.2d 379 (Colo. App. 1983).

Trucking company by statute construed to be employer. Where the work contracted out by trucking company was part of its regular business operation that ordinarily would have been accomplished by its own employees, under such circumstances, trucking company is by statute construed to be an employer. Archer Freight Lines v. Horn Transp., Inc., 32 Colo. App. 412, 514 P.2d 330 (1973).

Governmental entity cannot be a constructive employer pursuant to subsection (1). Antal v. Delta County Mosquito Control Dist. No. 1, 644 P.2d 87 (Colo. App. 1982).

Parent corporation, sued by employee of its wholly-owned subsidiary, is not an "employer" entitled to immunity from tort liability under the workmen's compensation act. Peterson v. Trailways, Inc., 555 F. Supp. 827 (D. Colo. 1983).

Parent company was a statutory employer where court found an implied contract existed between parent and subsidiary in which there was a mutuality of obligation. Therefore, parent company was immune from suit pursuant to subsection (1)(a). Rowan v. Vail Holdings, Inc., 31 F. Supp. 2d 889 (D. Colo. 1998).

This section is not intended to apply to employers otherwise exempted. Hefley v. Morales, 197 Colo. 523, 595 P.2d 233 (1979).

Whether a person or entity has the status of statutory employer is generally a question of fact. Thornbury v. Allen, 991 P.2d 335 (Colo. App. 1999); Humphrey v. Whole Foods Mkt. Rocky Mtn., 250 P.3d 706 (Colo. App. 2010).

However, where the facts are undisputed, the trial court's determination of statutory employment status drawn from those facts is a question of law that is reviewed de novo. Newsom v. Frank M. Hall & Co., 101 P.3d 1107 (Colo. App. 2004), rev'd on other grounds, 125 P.3d 444 (Colo. 2005); Humphrey v. Whole Foods Mkt. Rocky Mtn., 250 P.3d 706 (Colo. App. 2010).

Type of employee deemed question of law. Where the facts are undisputed, the question of whether an individual is an employee, as defined by § 8-41-106, or a constructive employee, to whom work has been contracted out as defined by subsection (1) of this section, is a question of law, not a question of fact. Univ. of Colo. Med. Ctr. v. Indus. Comm'n, 622 P.2d 596 (Colo. App. 1980).

"Cost of such insurance" recoverable by statutory employer is actual cost, where general contractor seeks reimbursement from uninsured subcontractor under subsection (1)(b). This provision should not be construed to encourage subcontractors to ignore their primary responsibility for insuring their own employees, as by allowing the statutory employer to recover only the hypothetical cost of insuring the one employee of the subcontractor that happened to be injured under a "guaranteed cost" type of policy. Winer's Pumping Units v. Emerald Gas Operating Co., 936 P.2d 627 (Colo. App. 1997).

The Workers' Compensation Act excepts from coverage employers of persons engaged in domestic or other work "about a private home" and excepts from employer status "the owner of a private home who contracts out any work done to or about said home". These exceptions are not intended to abrogate the borrowed servant doctrine in the case of work performed at a private home, except in the limited situations in which the domestic employment is not on a full-time basis. Evans v. Webster, 832 P.2d 951 (Colo. App. 1991).

Dispositive considerations as to whether construction constitutes work "to or about" a home are the location of the improvement and the purpose for which it is to be used. O'Neill v. Indus. Claim Appeals Office, 778 P.2d 295 (Colo. App. 1989).

The Workers' Compensation Act was intended to apply to claimant who was hired to perform domestic services on a full-time basis, when employer compensated dual employer for claimant's services, and dual employer maintained workers' compensation coverage on claimant's behalf. Evans v. Webster, 832 P.2d 951 (Colo. App. 1991).

Proper characterization of employment relationship depends upon facts determined by commission. The determination of the proper characterization of the employment relationship depends upon the facts in each case. This determination must properly be made by the commission rather than the court, even though the facts are largely undisputed, because this matter is not within the court's scope of review. Schultz v. Indus. Comm'n, 34 Colo. App. 122, 523 P.2d 164 (1974).

Examination of nature and needs of employer's business determines nature of work contracted out. The issue of whether work contracted out is part of the regular business of an employer is not affected by the fact that the subcontractor is an independent entity who has a business of his own; rather, the question is to be determined by examining the nature and needs of the employer's business. Melody Homes, Inc. v. Lay, 44 Colo. App. 49, 610 P.2d 1081 (1980).

Lessees are liable for accidental injuries to their employees, regardless of the liability of the lessor. Index Mines Corp. v. Indus. Comm'n, 82 Colo. 272, 259 P. 1036 (1927).

This section cannot be limited to cases where lessees are themselves employees. Index Mines Corp. v. Indus. Comm'n, 82 Colo. 272, 259 P. 1036 (1927).

This section extends common-law immunity from suit by an injured employee to an agent of the claimant's statutory employer. Posey v. Intermountain Rural Elec. Ass'n, 41 Colo. App. 7, 583 P.2d 303 (1978).

This section has no force if it applies only to the case of actual employer and employee. Its force lies in the fact that it says that one shall "be construed to be" an employer who would not otherwise be such. Index Mines Corp. v. Indus. Comm'n, 82 Colo. 272, 259 P. 1036 (1927); Zimmerman v. Indus. Comm'n, 109 Colo. 533, 127 P.2d 878 (1942).

This section pertains to the potential liability of a general contractor under the Act for injuries to a subcontractor's employee when the general contractor has not borrowed the subcontractor's employee; the focus is whether the work contracted out is part of the employer's regular business operation. Evans v. Webster, 832 P.2d 951 (Colo. App. 1991).

One who contracts out his work or any part of it to a subcontractor is himself an employer of the subcontractor and the subcontractor's employees. Herriott v. Stevenson, 172 Colo. 379, 473 P.2d 720 (1970).

This statute makes an employer responsible for subcontractors and their employees when the employer has contracted-out part of his regular business. Frohlick Crane Serv., Inc. v. Mack, 182 Colo. 34, 510 P.2d 891 (1973).

The general assembly, by extending workers' compensation liability to cover the injury or death of "contractors, or subcontractors", intended that workers' compensation be the remedy for all contractors "downstream" from the one contracting work, regardless of how many intermediate contractors there might be. Buzard v. Super Walls, Inc., 681 P.2d 520 (Colo. 1984).

And it provides that a subcontractor and his employees are deemed to be employees of the employer who contracts for others to do his work. Frohlick Crane Serv., Inc. v. Mack, 182 Colo. 34, 510 P.2d 891 (1973).

The general assembly did not intend that a subcontractor should be free of responsibility for his own negligence or the negligence of his employees. Frohlick Crane Serv., Inc. v. Mack, 182 Colo. 34, 510 P.2d 891 (1973).

And a subcontractor may be sued by an employee of a general contractor. Frohlick Crane Serv., Inc. v. Mack, 182 Colo. 34, 510 P.2d 891 (1973).

Subcontractor's violation of contract could not prevent operation of section. If a violation by a subcontractor of the terms of his contract could prevent the operation of the contracting-out statute, the statute's effectiveness in the statutory scheme would be lost. San Isabel Elec. Ass'n v. Bramer, 182 Colo. 15, 510 P.2d 438 (1973).

This section is not limited to specific technical relationships. It covers every business conducted by one through the activities of another under any kind of contract. Rhodes v. Indus. Comm'n, 99 Colo. 271, 61 P.2d 1035 (1936); Cont'l Oil Co. v. Sirhall, 122 Colo. 332, 222 P.2d 612 (1950).

And one may be an employee by virtue of this section, when in fact he is not an employee by common-law definition. Cont'l Oil Co. v. Sirhall, 122 Colo. 332, 222 P.2d 612 (1950).

Where claimant worked full-time and there was no evidence that he was hired for the completion of single tasks, or on a per task basis, ALJ erred in concluding that he was not an actual employee. The "relative nature of the work" test, if applied, would show that the claimant was an actual employee and not an independent contractor barred from making a claim by this section. Stampados v. Colo. D & S Enters., 833 P.2d 815 (Colo. App. 1992).

The "business" of a person is that calling which he pursues for livelihood or gain. Am. Radiator Co. v. Franzen, 81 Colo. 161, 254 P. 160 (1927).

Owners of leased property become "employers" of lessee within meaning of this section. Rogers v. Solem, 103 Colo. 52, 83 P.2d 154 (1938).

Application of subsection (1). Subsection (1) has been construed to apply to businesses conducted through the activities of another under a contractual relationship. Standard Oil Co. v. Indus. Comm'n, 38 Colo. App. 39, 552 P.2d 1029 (1976).

A general contractor is only immune from tort liability under subsection (2) if it is a statutory employer under subsection (1)(a). Cowger v. Henderson Heavy Haul Trucking, 179 P.3d 116 (Colo. App. 2007).

Provisions apply on federal land. State workmen's compensation provisions apply to land owned by the federal government. Hence, statutory employer immunity bars a suit for damages for personal injuries incurring in an accident at a nuclear weapons facility in Colorado, owned by the United States and operated by a private company. Stewart v. United States, 716 F.2d 755 (10th Cir. 1982).

Employees of lessee. Where an oil company owned a good many filling stations which it leased out for a term of one year and it was shown that all of the lessees sold only the lessor's products, by virtue of this section any employee of the lessee was an employee of the oil company as far as workmen's compensation is concerned. Cont'l Oil Co. v. Sirhall, 122 Colo. 332, 222 P.2d 612 (1950).

Oil company was the constructive statutory employer of claimant who worked at a service station leased by the oil company to its dealer. Standard Oil Co. v. Indus. Comm'n, 38 Colo. App. 39, 552 P.2d 1029 (1976).

Officer rejecting coverage under the act pursuant to § 8-41-202 is subject to the cap on tort recovery found in this section. Kelly v. Mile Hi Single Ply, Inc., 890 P.2d 1161 (Colo. 1995).

As a sole proprietor and a person excluded from the definition of employee, sole proprietor who chose not to purchase workers' compensation coverage is within the group of individuals generally subject to the statutory limit on damages pursuant to subsection (3). Pulsifer v. Pueblo Prof'l Contractors, Inc., 161 P.3d 656 (Colo. 2007); Cavaleri v. Anderson, 2012 COA 122, 298 P.3d 237.

The limitation in subsection (3) applies to both a sole proprietor who contracts with a general contractor and a sole proprietor who contracts directly with the property owner. Cavaleri v. Anderson, 2012 COA 122, 298 P.3d 237.

In reconciling § 8-41-103 and subsection (3), the court upheld trial court's reasoning that corporate officer who has elected to reject workers' compensation coverage may bring tort action only against employer. Whether or not a corporate officer has elected to reject such coverage, employees covered by Workers' Compensation Act are still limited to their rights and remedies under the Act. Kelly v. Mile Hi Single Ply, Inc., 873 P.2d 13 (Colo. App. 1993).

Tort suit against borrowed employee barred where: Special employer had the exclusive right to control the work of the borrowed employee operator pursuant to the lease agreement, at the time of the accident the borrowed employee operator was performing work for the special employer, the special employer was controlling the work, and the borrowed employee operator acquiesced to this special employment relationship. Morphew v. Ridge Crane Serv., Inc., 902 P.2d 848 (Colo. App. 1995).

The focus on "another not in the same employ" is on whether the services are being directly performed for another and not on whether one of the parties meets the statutory definition of employer; therefore, an injured plaintiff is entitled to sue a defendant who is not a direct party to the agreement for services and is not subject to the statutory limitation on damages. If the parties are principal parties to the agreement for services, the limitation on damages does apply. Pulsifer v. Pueblo Prof'l Contractors, Inc., 161 P.3d 656 (Colo. 2007); Cavaleri v. Anderson, 2012 COA 122, 298 P.3d 237.

Damages cap in subsection (3) applies to a corporate officer of a single-member corporation who rejects workers' compensation insurance coverage only if the rejecting corporate officer is a "principal party" to the agreement for services. Because plaintiff is not a principal party to the agreement, the damages cap does not apply to his claim. Ramirez v. KLM Constr., Inc., 2025 COA 99, 585 P.3d 870.

Independent contractor who elects not to obtain a policy of workers' compensation insurance covering himself is precluded from recovering more than the $15,000 statutory limit in damages from an uninsured motorist policy of the employer of a tortfeasor who is in the same employ as the independent contractor. Cont'l Divide Ins. Co. v. Dickinson, 179 P.3d 202 (Colo. App. 2007).

Independent contractors who work with each other and not for each other and do not have an agreement to do work for each other are not "in the same employ" and therefore not subject to the Workers' Compensation Act and the $15,000 limitation on damages set forth in subsection (3). Therefore, one such independent contractor who is injured on the job by the negligence of another independent contractor may recover damages in excess of the limitation. Curry v. Brewer, 2025 COA 28, 569 P.3d 115.

Applied in Horn Transp., Inc. v. Claimants in re Death of Wards, 40 Colo. App. 395, 576 P.2d 195 (1978); Kalmon v. Indus. Comm'n, 41 Colo. App. 259, 583 P.2d 946 (1978); Campbell v. Black Mtn. Spruce, Inc., 677 P.2d 379 (Colo. App. 1983); Buzard v. Super Walls, Inc., 681 P.2d 520 (Colo. 1984); Wagner v. Coors Energy Co., 685 P.2d 1380 (Colo. App. 1984); Black v. Cabot Petroleum Corp., 877 F.2d 822 (10th Cir. 1989).

II. LIABILITY OF LESSOR OR EMPLOYER.

Employee of a trust. Rhodes v. Indus. Comm'n, 99 Colo. 271, 61 P.2d 1035 (1936), distinguishing Flick v. Indus. Comm'n, 78 Colo. 117, 239 P. 1022 (1925).

General contractor liable for benefits to survivors of subcontractor's employee. As a statutory employer, a general contractor is liable for workmen's compensation benefits to survivors of an employee of a subcontractor if the subcontractor fails to obtain workmen's compensation insurance coverage. Edwards v. Price, 191 Colo. 46, 550 P.2d 856 (1976).

Security service employee entitled to benefits under section. An employee of a security service, who is injured while patrolling a construction site which the security service has been hired to guard, is a statutory employee of the general contractor and, therefore, he is entitled to benefits under this section. Melody Homes, Inc. v. Lay, 44 Colo. App. 49, 610 P.2d 1081 (1980).

Application of subsection (2). Even though subcontractor had workmen's compensation coverage for his employees, the subcontractor himself was not covered by the policy and therefore was covered by the policy of the prime contractor as an employee thereof. Oliver Const. Co., Inc. v. Indus. Comm'n, 680 P.2d 1308 (Colo. App. 1983).

This section confers an immunity on a general contractor or a real property owner in exchange for a duty which inheres to the benefit of a workman, so that, while a workman will be required to forego a negligence action against a general contractor or real property owner, he will be assured that regardless of fault, the more solvent general contractor or real property owner stands behind and secures the workmen's compensation liability of the workman's immediate employer. O'Quinn v. Walt Disney Prods., Inc., 177 Colo. 190, 493 P.2d 344 (1972).

Where the survivors of an employee of a subcontractor received their workmen's compensation benefits from the subcontractor, this section provides that the survivors cannot maintain a negligence action against the general contractor or any of its principals. Edwards v. Price, 191 Colo. 46, 550 P.2d 856 (1976).

Liability as employer of corporation leasing or contracting out. This section provides that any corporation engaged in any business by leasing, or contracting out any part or all of the work thereof to any contractor or subcontractor, shall be construed to be and be an employer as defined in articles 42 to 66 of this title, and shall be liable to pay compensation for injury or death resulting therefrom to the contractors and subcontractors and their employees. Index Mines Corp. v. Indus. Comm'n, 82 Colo. 272, 259 P. 1036 (1927); Cont'l Oil Co. v. Sirhall, 122 Colo. 332, 222 P.2d 612 (1950); Indus. Comm'n v. Vancil, 133 Colo. 238, 293 P.2d 641 (1956); White v. Indus. Comm'n, 140 Colo. 11, 342 P.2d 668 (1959); Nicks v. Electron Corp., 29 Colo. App. 114, 478 P.2d 683 (1970); San Isabel Elec. Ass'n v. Bramer, 31 Colo. App. 134, 500 P.2d 821 (1972).

A lessor is liable as a statutory employer under this section when it is shown that the lessor operates, engages in, or conducts his business by leasing his property. Standard Oil Co. v. Indus. Comm'n, 38 Colo. App. 39, 552 P.2d 1029 (1976).

And single act of leasing constitutes "operating" or "conducting" business under this section. Indus. Comm'n v. Hammond, 77 Colo. 414, 236 P. 1006 (1925).

Apparent corporate status of contractor not basis for estoppel defense of employer. An employer who fails to obtain workmen's compensation coverage for a contractor who is not himself an "employer" as defined by § 8-41-105 (1)(b) cannot assert a defense of equitable estoppel based upon the contractor's alleged corporate status. Canda v. Indus. Comm'n, 44 Colo. App. 70, 607 P.2d 403 (1980).

Company not a statutory employer. Where a contract speaks in terms of an independent contractor and not of an employee; it has little to do with a company's business; it contemplates a single definite result without the company's having the slightest control as to the method or time of work; and it refers to no semblance of wages, the company is not construed to be a statutory employer. London Guarantee & Accident Co. v. Indus. Comm'n, 95 Colo. 306, 35 P.2d 1010 (1934).

The test as to whether a lessor is liable is whether the subcontracted work is part of the regular business of the lessor. Standard Oil Co. v. Indus. Comm'n, 38 Colo. App. 39, 552 P.2d 1029 (1976).

Principals engaged in a joint enterprise are jointly responsible under the workmen's compensation act. Snyder v. Indus. Comm'n, 138 Colo. 523, 335 P.2d 543 (1959).

A joint venture falls within the meaning of the term "company" in this section. Edwards v. Price, 191 Colo. 46, 550 P.2d 856 (1976).

No comparative liability between subcontractor and contractor. Although this section gives the power to impose liability for the payment of compensation upon the original employer, who has become a subcontractor, and upon the contractor in the case of a compensable injury to an employee of the subcontractor, this section gives no authority to determine or fix a comparative degree of liability for the compensation as between the subcontractor employer and the contractor. Sechler v. Pastore, 103 Colo. 139, 84 P.2d 61 (1938).

Party who contracts work away is construed to be the employer. If the party to whom this statutory employer has contracted work out fails to secure workmen's compensation insurance, the statutory employer is liable to respond in damages to the injured employees of the other party. Stewart v. United States, 716 F.2d 755 (10th Cir. 1982).

Employment of claimants by an uninsured contractor operated to impose liability for compensation on the person contracting out the work of its business, and contractor was not liable for compensation. Breckenridge Co. v. Swales Mgt. Corp., 33 Colo. App. 51, 517 P.2d 476 (1973), modified, 185 Colo. 160, 522 P.2d 737 (1974).

Automobile manufacturer neither contractor out nor statutory employer of dealer's employee. Bukowich v. Ford Motor Co., 99 Colo. 56, 59 P.2d 470 (1936).

Unincorporated self-employed repairman. Self-employed sheet metal and heating repairman, using the name "M. Kunz and Sons, Inc.", although he had not completed incorporation, is not an "employer" and not required to carry workmen's compensation insurance for himself. Canda v. Indus. Comm'n, 44 Colo. App. 70, 607 P.2d 403 (1980).

Lessor is not liable where his lessee is an employer who has insured his liability under the act. Indus. Comm'n v. Bracken, 83 Colo. 72, 262 P. 521 (1927).

But lessor liable where lessee's insurance did not cover leased business. A lessee who carried compensation insurance for a business separate and distinct from operation of a leased mine, which insurance did not cover the mining operations, had not insured and kept insured his liability for compensation as required by this section, the lessor was thus liable. State Comp. Ins. Fund v. Batis, 117 Colo. 1, 183 P.2d 891 (1947).

And failure of lessee to carry out agreement to insure does not relieve the lessor from liability. Index Mines Corp. v. Indus. Comm'n, 82 Colo. 272, 259 P. 1036 (1927); Joe Dandy Mining Co. v. Indus. Comm'n, 112 Colo. 241, 148 P.2d 817 (1944); Chevron Oil Co. v. Indus. Comm'n, 169 Colo. 336, 456 P.2d 735 (1969).

Likewise where a subcontractor fails to keep his compensation insurance in force, the contractor was not released from its liability under the act, and said subcontractor and deceased, under this section, are both constructive employees of the contractor and covered by its insurance policy. Hartford Accident & Indem. Co. v. Clifton, 117 Colo. 547, 190 P.2d 909 (1948).

Section does not apply to state board of land commissioners unless it elects to come under provisions of act. Where the state board of land commissioners, in exercising its administrative functions, executes a lease of mineral lands under its supervision for mining purposes, it is not conducting a mining business by leasing as contemplated by this section, unless it elects to place itself within the provisions of the act. Indus. Comm'n v. State Comp. Ins. Fund, 94 Colo. 194, 29 P.2d 372 (1934).

Lessors of coal mining property, operated by lessee, are employers within the meaning of this section and liable for compensation to an employee of lessee injured on the property in the course of his employment. McKune v. Indus. Comm'n, 94 Colo. 523, 31 P.2d 322 (1934).

Lessee who subleases construed as employer. Where owner of coal lease subleases to a partnership and thereby the partnership conducts mining operations, the owner of the lease is a lessor and employer under this section and liable to the employees of the partnership. Zimmerman v. Indus. Comm'n, 109 Colo. 533, 127 P.2d 878 (1942).

Failure of lessee to protect employees held to be a breach of the lease. Rocky Mt. Fuel Co. v. New Std. Coal Mining Co., 89 F.2d 147 (10th Cir. 1937).

Owner of property liable as "employer" unless independent contractor carries insurance covering employee. Indus. Comm'n v. Int'l Mut. Liab. Ins. Co., 103 Colo. 419, 86 P.2d 970 (1939).

Under previous section primary contractor was liable as third-party tortfeasor even though subcontractor had workmen's compensation insurance. Thomas v. Farnsworth Chambers Co., 286 F.2d 270 (10th Cir. 1960), rev'g 183 F. Supp. 764 (D. Colo. 1960).

Common-law action barred now unless subcontractor not an employer or not insured. While the definition of an employer found in § 8-48-101 adds a contractor-out to the definition of an employer in § 8-41-105, the language of the statute is clear to the effect that no common-law action under the act may be brought against a contractor-out by an injured employee of a subcontractor unless the subcontractor is either not an employer as defined by the act or has not insured his liability for compensation as required by the act. Herriott v. Stevenson, 172 Colo. 379, 473 P.2d 720 (1970); Nicks v. Electron Corp., 29 Colo. App. 114, 478 P.2d 683 (1970).

But subcontractor not immune from action in tort for injury to employee of another subcontractor. Inasmuch as the statute does not impose any workmen's compensation liability on a subcontractor for injury to an employee of another subcontractor on the same job, the statute does not grant immunity to such a subcontractor for torts against employees of other subcontractors. Krueger v. Merriman Elec., 29 Colo. App. 492, 488 P.2d 228 (1971).

For right to third-party action denied only as against one contracting out. The right to bring third-party actions, referred to in the statute as "actions under section 8-52-108", is denied only as against the person, engaged in or conducting any business by contracting out any part or all of the work thereof. The person thus protected from third-party liability is the person on whom statutory liability is imposed; i.e., the principal contractor. Krueger v. Merriman Elec., 29 Colo. App. 492, 488 P.2d 228 (1971).

Lessor is not liable for hospital bills contracted with strangers. While under this section a lessor of property upon which business operations are conducted sustains the relationship of employer to the lessee thereof and his employees, the law does not extend its liability beyond that of paying compensation for accidental injury or death sustained in the course of employment, and the commission is without jurisdiction to order it to discharge medical and hospital bills contracted with strangers to the law, the parties and proceedings, the bills not being authorized by such lessor. Rocky Mt. Fuel Co. v. Indus. Comm'n, 105 Colo. 220, 96 P.2d 413 (1939). Rocky Mt. Fuel Co. v. Indus. Comm'n, 105 Colo. 226, 96 P.2d 416 (1939).

Where a canning company, in order to obtain products for canning, enters into contracts with growers giving the company an option to assist growers to produce, or to produce for the grower the crews, trucks, and other equipment proper for the expeditious harvesting and delivery of peas, and at company's option to pay for such labor, trucks and services and charge same against grower's account, and the company exercises such option by directing a grower's employee to gather peas for other contracting growers, the gathering of peas becomes "a part of the work thereof" and grower's employee is an employee of the company under this section. Betz v. Indus. Comm'n, 109 Colo. 385, 125 P.2d 958 (1942).

Death of independent contractor. A country club, whose organization was merely for the convenience and pleasure of its members, was held not to be liable for benefits payable under workmen's compensation for the death of a contractor who was accidentally electrocuted while constructing three manholes along the club sewer line, as all of the facts showed that decedent was an independent contractor. Meyer v. Lakewood Country Club, 122 Colo. 110, 220 P.2d 371 (1950).

Interstate moving company liable for helper's compensation benefits. Where interstate moving company leased truck from its New York intrastate agent and where truck driver, who was a driver for the agent, was directly supervised and controlled by the interstate company, the driver was an employee of the interstate company at the time of the injury to his helper while working in Colorado and thus, the interstate company was liable for the helper's workmen's compensation benefits. Market v. Feuer Moving & Storage, 33 Colo. App. 80, 515 P.2d 126 (1973).

Subsection (6) creates a narrow exception to statutory employment status for independent transportation contractors who contract for a single delivery. The exception does not apply to a transportation contractor who contracts for regular delivery of eight to twelve loads a day for six weeks. Hurst Constr. Co. v. Ramey, 821 P.2d 858 (Colo. App. 1991).

Person cleaning windows for heating company held to be employee of window cleaning company. A person accidentally injured while cleaning windows for a company engaged in manufacturing and selling heating plants and which employed a window cleaning company to clean its windows, held to be an employee of the window cleaning company by which he was regularly employed, and not of the heating company. Am. Radiator Co. v. Frazen, 81 Colo. 161, 254 P. 160 (1927).

One engaged by a coal company to haul coal with his own truck at a fixed price per ton, held, under the facts disclosed, to be an employer and not a contractor. Indus. Comm'n v. Bonfils, 78 Colo. 306, 241 P. 735 (1925).

The terms farming, ranching, or agricultural labor, using their ordinary meanings, do not include construction of a building. Sorensen v. Goldman, 837 P.2d 266 (Colo. App. 1992).

Contracting out for delivery of part of crop was a "farming operation" within meaning of subsection (3). Therefore, the contractor, not the farmer, was primarily responsible for workers' compensation coverage. State Comp. Ins. Fund v. Indus. Comm'n, 713 P.2d 405 (Colo. App. 1985).

Owner of land agreeing that another might enter and operate a gravel pit on a royalty basis is not liable as a lessor. Where the owner of land agreed that another might enter thereon and operate a gravel pit on a royalty basis, it is held that the industrial commission was not justified in finding him liable for the payment of compensation as a lessor, under this section. Flick v. Indus. Comm'n, 78 Colo. 117, 239 P. 1022 (1925).

Assignees of mining property contracting with original lessee held to be contracting out part of work. Assignees of mining lease with option to purchase, who contracted with the original lessee for mining work on the property, held to have been engaged in the operation of a mining business by contracting out part of the work, under this section, and liable for compensation for the accidental death of their assignor contractor occurring while he was engaged in such work. Devereux v. Indus. Comm'n, 87 Colo. 594, 290 P. 287 (1930).

And fact that assignees with option to purchase did not own property held not to affect their liability. The fact that assignees of a mining lease with option to purchase did not own the property and had not perfected any interest therein when their assignor was killed while doing work for them under contract on the property, held not to affect their liability for his death under the workmen's compensation act. Devereux v. Indus. Comm'n, 87 Colo. 594, 290 P. 287 (1930).

Owner of mining property liable for injuries to employee of contractor constructing an upraise on mining property. An owner who contracted with another to construct an upraise on his mining property, held to be an employer engaged in the business of mining and liable for compensation for injuries received by an employee of the contractor received while engaged in the work, under this section. Ontario Mining Co. v. Indus. Comm'n, 86 Colo. 206, 280 P. 483 (1929).

A person employed by an independent contractor to drive a truck in delivering coal, held, under the provisions of this section, to be an employee of the company under which the contractor was doing business. Indus. Comm'n v. Cont'l Inv. Co., 78 Colo. 399, 242 P. 49 (1925).

Claim of regular employee of university's medical center controlled by § 8-41-106 (1)(a)(I). Where nurse claiming benefits was a regular employee of the university of Colorado medical center, § 8-41-106 (1)(a)(I) controlled the award of benefits, not subsection (1) of this section. Univ. of Colo. Med. Ctr. v. Indus. Comm'n, 622 P.2d 596 (Colo. App. 1980).

Injury to employee of company contracting with municipality. State Comp. Ins. Fund v. Alishio, 125 Colo. 242, 250 P.2d 1015 (1952).

Applied in Pittman Motors, Inc. v. Indus. Comm'n, 156 Colo. 218, 399 P.2d 784 (1964).